First Time Landlords are on the increase

first time landlords buy to let mortgagesRecent research by Paragon has revealed first time landlords to be on the increase. And the number of first time landlords obtaining the advice from a Mortgage Broker to acquire a Buy-to-Let mortgage has been steadily increasing since 2009. Perhaps, understandably, this sector of the market was most active in 2002 and the lowest level of activity reported was in 2008.

Paragon predicts that many ‘Professional Landlords’ (defined by Paragon as those with 6 or more properties) may remain somewhat subdued as raising finance may be restricted for them. With the ‘Private Investor Landlords’ (those with 1-5 properties) picking up much of the slack, along side first time Landlords. From our experience at Harvey Bowes, mortgage brokers, we are seeing activity across the spectrum with experienced landlords looking to remortgage properties within their portfolio to create further deposits for on going purchases.

Some lenders consider a Landlord to be experienced if they have owned a rental property for more than 6 months and this opens the door to more opportunities in respect of higher LTV (loan to value) products being available. It also means that with some lenders there is no minimum income requirement for experienced Landlords and this is another way in which increased opportunities are available to those who have already made a start on their property investment journey.

The activity reported by Paragon is certainly in agreement with our experience at Harvey Bowes Limited, as mortgage brokers we have seen a huge increase in BTL enquiries, not least from First Time Landlords looing to make a start in the market. With banks offering little return on money saved, the prospect of buying property has greater attraction. It is also reported by Halifax that house prices have increased to an average house price of £166,094 which is a 4% increase in the last 12 months.

Since the Funding for Lending scheme got underway, we have also seen a price war between lenders resulting some excellent buy to let deals; and while interest only mortgages are difficult to obtain in the residential market, they are more easily available with Buy to Let mortgages. This means that with the right property and the right mortgage to fund it, healthy monthly cash-flow can be achieved right from the start of ones investment.

For first time Landlords it may be tempting to purchase low value properties in areas in need of regeneration, however, one should always consider rental demand carefully when selecting an investment property. Void periods result in the Landlord funding the mortgage payments and other associated costs, which is a key reason why areas of strong rental demand are important to developing a successful investment strategy.

If you are looking for advice on BTL mortgages, contact the team at Harvey Bowes today on 029 2115 6918.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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About harveybowes
Mortgage Broker and founding Director of Harvey Bowes Limited. A mortgage broking practice with bases in Cardiff & Poole, UK. We take a fresh and positive approach to mortgage broking which pays dividends for both our clients and frankly, ourselves. The team at Harvey Bowes are expert advisors in all aspects of mortgages from residential to commercial and buy to let.

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